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Minhaz Merchant

Minhaz Merchant is the biographer of Rajiv Gandhi and Aditya Birla and author of The New Clash of Civilizations (Rupa, 2014). He is founder of Sterling Newspapers Pvt. Ltd. which was acquired by the Indian Express group

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Empire Of Babus

Much of the usurious corruption has sprung from the ministry of defence and the ministry of finance. The former controls large defence purchase budget

Photo Credit : Shutterstock,

When Narendra Modi became Prime Minister, he took two immediate key decisions. One, he disbanded the Groups of Ministers (GoMs) that had mushroomed to more than 20 during the UPA government. Two, he called a meeting of more than 75 senior bureaucrats cutting across ministries.

The message: you now have direct access to me. Work hard and work fast. The intent: to replace India’s notorious red tape with a red carpet — a Modi campaign promise. The outcome: the babus worked hard and fast for several months. Without tedious, interminable and often infructuous GoM meetings the bureaucracy became energised.

It didn’t last. The Indian bureaucracy is a unique animal. Created as the Indian Civil Service (ICS) by the British, it formed what Jawaharlal Nehru called India’s “steel grid”. The ICS morphed after Independence into the IAS but the change in alphabet hid the fact that real changes did not occur. The ICS had served an exploitative empire. The nomenclature it gave its officers gave the game away: for example, District Collectors were principally tasked to collect taxes from the districts.

After Independence, the IAS should have changed not only such honorifics (69 years later, it still hasn’t) but also its mission: to serve, not rule. The steel grid of the civil service has long rusted. Worse, it has been co-opted by unsavoury politicians. Most of the serial corruption scandals since Bofors in 1987 have had a political-bureaucratic nexus.

Much of this usurious corruption has sprung from the Ministry of Defence (MoD) and the Ministry of Finance (MoF). The former controls large defence purchase budgets. Bureaucrats with negligible knowledge of defence technology decide billion-dollar deals.

Extraordinarily, no officer from the army, air force or navy is attached to the MoD. Under a weak defence minister such as A.K. Antony, bureaucrats ruled the roost. The outcome was appalling on two fronts. First, kickbacks. Second, delayed decisions on fighter jets, battleships and even ammunition.

With a virtual war raging on the India-Pakistan border, the lack of ammunition was especially serious. India had to make emergency off-the-shelf purchases of ammunition, firearms, and other defence equipment from Israel and Russia worth over Rs 5,000 crore in September 2016 with delivery schedules ranging from immediate to three months.

Clearly, defence minister Manohar Parrikar must shoulder some responsibility for this appalling state of affairs. He has been in the job for two years and blaming Antony for all such lapses will no longer do.

Worse, MoD bureaucrats have continuously sought to sabotage relations with the armed forces. The latest ploy to downgrade military officer ranks with relation to civil service officers through a letter dated 18 October 2016 was nipped in the bud due to media pressure. The matter is now being resolved by Parrikar whose good intent is often stymied by slow reactions to events in his ministry.

Parrikar was proactive during the OROP imbroglio and passed the file in early 2015 over the heads of MoD officers. However, their colleagues in the MoF sat on the file for four months, fetching the government bad press — and the entirely avoidable distrust of the armed forces. Much the same bureaucrat-inspired shenanigans muddied the waters over rank-linked increments to the armed forces under the Seventh Pay Commission as well as disability compensation.

In each case, Parrikar — with Modi’s full support — had to firefight before righting babu-manufactured wrongs. The suicide of a jawan, Subedar Ramkishan Grewal, over OROP pension payments was quickly seized upon by opposition politicians Rahul Gandhi and Arvind Kejriwal.

The MoF has been a particularly malignant breeding ground for bureaucratic malfeasance. Apart from its role in OROP, disability compensation and the Seventh Pay Commission controversies, it has succeeded in keeping the worst legislation of the UPA government on the statute books: retrospective tax. Like Parrikar, finance minister Arun Jaitley must accept responsibility for not repealing this egregious tax that has diminished India’s global reputation. He has had three Budget opportunities to do so and has fluffed all three. Another Budget arrives in early February 2017. Jaitley should seize the opportunity or shoulder the opprobrium that accompanies the retro tax.

Modi is meanwhile trying to combat the bureaucratic inertia by setting up 10 Groups of Secretaries to conduct a mid-term review in December 2016 of the state of major projects ahead of the Union Budget.

Bureaucrats, of course, aren’t all inert. Some like Amitabh Kant, the CEO of Niti Aayog, have been agents of transformation. Many young IAS officers, posted in Maoist-infested areas, are brave, committed and selfless. The problem arises when Central postings beckon. The lure of the entrenched political-bureaucratic nexus with easy pickings, can tempt the best. Clearly, IAS reforms are essential. Modi’s attempts towards this end have been focused and patient but borne limited results. More drastic reforms must now be his priority as he enters the second half of his five-year term as prime minister.

This is what I wrote on IAS reform: “The second Administrative Reforms Commission (ARC), headed by former law minister Veerappa Moily, has not been implemented. The second ARC’s report is an outstanding document with over 15 closely argued, well-written chapters on reforming the bureaucracy. If implemented, it would transform the IAS and the quality of public services in India. “In the spring of 1964, shortly before his death, Jawaharlal Nehru was asked in private by his closest colleagues what he regarded as his greatest failure as India’s first Prime Minister. Nehru replied: ‘I could not change the administration. It is still a colonial administration and one of the main causes of India’s inability to solve the problem of poverty.’”

One of the reasons India moved up just one place to 130 in the World Bank’s latest index of ease of doing business is the intransigence of the Permit Raj. Despite Modi’s efforts to cut red tape, India is ranked at 185 on getting “construction permits” and at 155 on “starting a business”. In the World Bank survey India does best on three parameters: “protecting minority investors” (13), “getting electricity” (26) and “getting credit” (44). Notably, all three have minimal inputs from bureaucrats. The moral of the story couldn’t be clearer.


This article was published in BW Businessworld issue dated 'Dec. 12, 2016' with cover story titled 'India's Super Rich 2016'



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